Why the equal employment opportunity law failed in Japan

by Eunmi Mun

Faced with a very low fertility rate and a rapidly aging population, Japan is on the brink of a population crisis.

As a result, utilizing female labor has become a new national goal. Among the three arrows of Abenomics—a set of economic reform policies proposed by current Prime Minister Abe—the third arrow focuses specifically on increasing women’s labor force participation and their representation in management positions.

Unfortunately, almost 60 percent of Japanese women still quit their jobs by the time they have their first child. Further, only 10 percent of managerial positions are currently held by women, and merely 1 percent of board directors of publicly-traded Japanese firms are women (see here for international comparison).

In the Global Gender Gap Report 2015, issued by the World Economic Forum, Japan was ranked 101 out of 145 countries for gender equality; even worse, it was ranked 116th for women’s representation as legislators, senior officials, and managers.

This should not be news to those familiar with contemporary Japanese society. It is well known that Japan has persistently shown workplace gender inequality.

What is less well known is how the large gap has been maintained over many decades, despite changes to legal, economic, and socio-political environments. My recently published research investigates this process over time.

I examine how large Japanese corporations responded to the passage of the Equal Employment Opportunity Law of 1985 and its revision of 1997. The initial law was weak and ambiguous, requiring companies only to “endeavor” (doryoku gimu) to not discriminate against women. Later, it was toughened to better regulate corporate behavior.

I investigated how the toughened law changed corporate behavior, analyzing data from more than 1,000 publicly-traded Japanese companies from 1985 to 2009, and then complementing this data with my own interviews with human resource managers from 20 companies.

Many large Japanese companies criticized the ideal of the equal opportunity law, claiming it was incompatible with their model of organizational efficiency, known as the logic of internal labor markets (ILMs).

Following ILM logic, employers prefer employees who can make a long-term, continuous commitment; hence, women, who are seen as likely to quit for family reasons, were allocated to marginalized, dead-end jobs. (This gendered arrangement was considered to be a component of the lifetime employment system that was praised as an engine of the Japanese economic miracle during the post-war period.)

The Japan Employers’ Association (Nikkeiren), representing the business community, openly argued that the equal opportunity law would “cause chaos in personnel management systems and eventually undermine the strength of the Japanese employment system.”

In order to preserve sex segregation, many Japanese companies symbolically complied with the 1985 law by adopting a two-track system (kōsubetsu kanri seidō) that divided the workforce into two seemingly gender-neutral tracks: the managerial track that provided opportunities for job training, higher wages, and promotion (sōgōshoku) and the clerical track without such opportunities (ippanshoku).

Ironically, this new employment system, invented specifically to comply with the Equal Employment Opportunity Law, formalized sex segregation even further as women were largely slotted into the clerical track.

After criticism mounted over the ineffective law, Japan passed a stronger law in 1997. Some doubted whether the new law really was strong enough, but it was at least stronger than the initial one: first, because it was mandatory and second, because other laws were passed to facilitate its enforcement. The revised law attempted to specifically prevent symbolic compliance, i.e., the sex-segregating track system, which was considered to be a major obstacle that kept women from entering the core workforce.

Despite these legal changes, little was improved. In fact, women’s employment opportunities decreased in some companies after the revision of the law.

Instead of complying with the legal ideal, symbolic compliers who adopted a two-track system after the 1985 law followed one of two possible responses.

Some companies that were reluctant to abandon the sex-based ILMs responded symbolically once again by renaming the two tracks or inventing new tracks. Relying on legal loopholes, they argued that their tracks are based on functional differences and thus not illegal.

But, other companies discarded the ILM logic, which gave preference to keeping the workforce within the firm, and now chose to outsource the female-dominated clerical track. In other words, they complied by dropping the two-track system while simultaneously stopping hiring women. Consequently, these companies hired even fewer women after the law’s revision. I call this response negative compliance.

Unlike symbolic compliers who interpret laws and show efforts of compliance through symbolic actions, negative compliers stop engaging with the law altogether by changing their internal structure in such a way as to make it impossible to violate the law. Japanese companies that negatively complied with increased legal pressures to incorporate female employees into their core workforce by outsourcing female labor thus eliminated their worries about treating women equally.

Although technically compliant, this approach represents active, radical resistance that is in direct conflict with the legal ideal.

While symbolic and negative compliance meant that the law did not achieve all that it had intended, this does not mean that the law failed entirely. Companies that had not adopted the two-track system and had better incorporated women into the workforce after the initial law (substantive compliers) hired even more women.

The increased legal pressure was thus effective in promoting further improvements among companies already compliant with the initial law, but it failed to change behavior among those who had resisted from the beginning.

Some Japanese companies saw negative compliance as a more attractive strategy following the law’s revision because the government was simultaneously relaxing rules about the use of temporary workers, which allowed companies to outsource their workforce. In this period, Japanese companies saw a new alternative logic to replace the ILM: the logic of workforce flexibility. Those that adopted this new logic, which changed decision-maker perceptions about how to best run an organization, were more likely to negatively comply.

The broader political-economic context, not just the organizational-level process, is therefore important.

My research primarily contributes to the puzzle of overall stability in workplace gender inequality in Japan, which represents an extreme case of gender inequality, but it also illuminates a general social mechanism underlying law and organizations.

Negative compliance is likely be widespread in a globalized economy where companies can externalize the source of conflict by offshoring those parts of their business that face legal sanctions. In this way, the concept of negative compliance draws attention to a concrete mechanism through which law can be challenged in the rapidly globalizing economy.

Given the undesirable consequences of such corporate tactics, it is all the more important to understand negative compliance and ways that it can be forestalled.